Deep Thought: Wenzhou 20% SME Bankruptcy Closes

According to CCTV's "half hour" news broadcast on the evening of 27, many people may not have been to Wenzhou, but few people have not used Wenzhou's products. The small town of Zhejiang Province has produced 10% of the country's clothing, 20% of shoes, 60% of shavers, 65% locks, 80% of glasses, 90% of metal casing lighters and 90% of watercolor pens. Wenzhou's low-voltage electrical appliances, hardware products, automobile and motorcycle accessories, and ceramic products also occupy an important position in China. It can be said that the rise of Wenzhou is a microcosm of China's manufacturing development. However, recently, when our reporter interviewed Wenzhou, she found that some of the local manufacturers that were once prosperous were now getting more and more upset.

The price of raw materials has brought great pressure on a garment factory located in a development area of Wenzhou. From the appearance, a four storey factory building shows that the size of the garment factory is not small. However, when the reporter walked into the factory, he saw such a scene: thousands of square meters of production workshop was empty, and a lot of large and small packages were stacked in the corner of the workshop. The reporter opened it and saw that the clothes were already processed, and hundreds of sewing machines were crowded together. It seemed to suggest that there had been a busy time here. And from the time of the notice issued on the wall, it is still being produced in January this year.

As the only left behind worker in the garment factory, the security guard clearly remembered that more than two months ago, the machine was roaring and noisy. Every day hundreds of workers came in and out, leaving him almost no time to rest. However, at that time, he had never thought that the sudden change occurred after the Spring Festival. The owner of the garment factory had to reluctantly turn off the factory because of the increasing losses since last year.

Lao Wang is a member of the whole house. He told reporters that his workshop had been rented to a garment factory. Because of his bad business, the owner of the garment factory closed the factory during the Spring Festival this year, so the old man had to find new customers. However, although the advertisement had been paid five or six times and the money had been spent, the rent of the factory had been reduced by about forty percent compared with the first two years, but the factory still could not rent it out. This made Lao Wang very anxious. Facing the empty factory building, Lao Wang was very worried. He did not know which day he would be able to rent out his workshop. After the Spring Festival this year, many smart Wenzhou people suddenly discovered that the factories in Wenzhou seem to have been shut down overnight. Meanwhile, there are more and more information about the pfer and rental of the factory buildings.

In fact, in addition to the large number of traditional labor-intensive enterprises such as clothing, shoes, electronics and so on, some of the characteristic light industries in Wenzhou are also beginning to have a crisis.

Lighter is one of the most distinctive industries in Wenzhou. At present, eighty or ninety of all metal shell lighters are produced in Wenzhou, which is a proud figure. However, as a leader in Wenzhou lighters industry, Zhou Tai Hu is worried.

Zhou Dahu told reporters that the number of lighters has dropped from about six hundred a year ago to the present 350 homes, and the lighters industry in Wenzhou has experienced unprecedented setbacks. When the peers once fell down one after another, the heart of Zhou Da Hu was not relaxed at all.

In fact, a crisis is spreading rapidly in all fields of Wenzhou's manufacturing industry. Zhou Dewen, President of Wenzhou SME Promotion Association and President of Wenzhou Academy of science and management, has studied and followed Wenzhou's economic development model for a long time.

Zhou Dewen, President of Wenzhou SME Promotion Association, said: "it should be said that Wenzhou's small and medium-sized enterprises are faced with a kind of very difficult situation, so it can be said to be expressed in crisis, or it can be said to be a relatively big crisis, especially after this spring, there are a number of small and medium-sized enterprises, he can not produce."

According to the statistics of Wenzhou SME Promotion Association, at present, there are more than 30 SMEs in Wenzhou. How many of them are or are they facing closure?

Zhou Dewen thinks that about 20% of the enterprises will be shut down or halt.

In Zhou Dewen's view, what is more noteworthy is that the crisis is not only in Wenzhou, but also faced with the same dilemma in some light industrial manufacturing industries in the Yangtze River Delta.

Zhou Dewen: "it should be said that I think this crisis exists everywhere. The Yangtze River Delta region, because I often take entrepreneurs to investigate, including several areas around Shanghai, such as Songjiang, Jinshan and so on, these areas are also facing this kind of crisis, including northern Jiangsu and Northern Jiangsu."

In the private economy of Wenzhou, small and medium-sized enterprises are the most energetic part. It can be said that it is precisely the numerous and vigorous small and medium-sized enterprises that have supported Wenzhou to make this big gold signboard. Many well-known manufacturing giants in Wenzhou, like Delisi and CHINT, though they are worth billions of billions of billions of dollars now, but want to start out from the small businesses of the workshop type, nowadays, many small and medium-sized manufacturing enterprises in Wenzhou are in trouble. What problems have they encountered?

Let's listen to the statement of business operators.

In Zhou Dahu's view, the lighters in Wenzhou collapsed eight or nine times in a year. One of the important reasons is that many enterprises are unable to bear the enormous pressure brought by the rising prices of raw materials.

Zhou Dahu said that Wenzhou's metal shell lighters were mainly made of zinc, copper, platinum, nickel and so on. In recent years, the price of non-ferrous metals has been surging forward, which has made the cost of enterprises greatly improved. For example, in the past two years, copper has increased two or three times from more than 20000 to sixty thousand or seventy thousand, and zinc has risen from eight thousand or nine thousand to twenty thousand or thirty thousand, sometimes thirty thousand or forty thousand.

Although the price of raw materials has increased, it is not so easy to raise the price of terminal products. Many enterprises are faced with the situation of not increasing price and death. The enterprises in Wenzhou have adopted the strategy of low cost and low price competition. If profits are raised and others are not mentioned, the business of enterprises will be swallowed up, so that the enterprise can not survive immediately.

The impact of the appreciation of the renminbi is also great. Prices continue to climb not only in raw materials, but also in labor costs. The head of a garment factory told reporters that he had been doing business for more than ten years, and never had a bad time finding workers like now.

At every factory gate in Wenzhou, there are almost all recruitment revelations.

Workers are unable to find satisfactory jobs and enterprises are short of work. This strange circle is becoming more and more intense in labor intensive areas. The new labor contract law, which began this year, presents new challenges to enterprises.

Zhou Dewen: "in general, different industries, on the average, strictly enforce the labor law, as enterprises will increase the cost of 15% or even 20%, so for enterprises, his profits can not be such a high profit, as a lot of small and medium enterprises, facing enormous pressure."

In fact, besides the increase of raw material prices and the increase of labor costs, the impact of RMB appreciation is also great for many export oriented Wenzhou enterprises.

Zhou Dewen: "in recent years, the appreciation rate is relatively fast, and it is expected to rise again next year. In this case, the small and medium-sized enterprises in Wenzhou are mostly export-oriented, and they have products exported through direct exports or foreign trade companies. Then, through the appreciation of the renminbi, to them, their profit margins are all eaten up. The previous export tax rebate policies in China have been lagging behind, and the present policies are also changing in a subtle way, which makes Wenzhou enterprises face enormous pressure."

As the US dollar continues to decline, consumer spending in the US and Europe is also weakening.

As early as more than 20 years ago, Wenzhou people went to all over the country to make a living, to repair leather shoes, cut clothes, cut hair, open restaurants, make buttons, sell small household appliances, other people disdained to do things that Wenzhou people can do, others can not eat bitter Wenzhou people can eat, others do not see the small money Wenzhou earn.

However, the traditional advantages of Wenzhou's SMEs are hard to cope with and survive.

Yu Wen pin has done nearly twenty years of wire and cable business. In this industry, it has been a small celebrity, and business has also done many parts of the country. This has envied many people. However, when it comes to setting up factories from Wenzhou to the outside world, Yu Wen pin is helpless.

Yu Wenpin said that one of the main reasons why the company decided to establish a production base in other provinces is that the land in Wenzhou is too expensive.

Now in Liushi town of Wenzhou, if the industrial land is slightly better in general, it may reach 60 or 70 acres.

Due to the fact that there were fewer people in Wenzhou and a large number of enterprises, Wenzhou's industrial land was becoming increasingly depleted. In the case of serious shortage of land, the price of land in Wenzhou continued to rise.

Zhou Dewen: "now that land resources are very scarce in Wenzhou, the level of industrial land has reached 200 yuan per mu. This is the most expensive land price in China. There are only 5 or 60 thousand places in the mainland. Even if Shanghai is a central city, its land price is much lower than that in Wenzhou."

Rising prices of raw materials, rising labor costs, weak foreign consumption markets and soaring land prices have made Wenzhou's small and medium-sized enterprises accustomed to relying on low prices for market and small boats to make a living. The problems have been going on one after another in the past two years. But just like 20 years ago, Wenzhou people did not wait for the pie in the sky. Now Wenzhou SMEs are not in jail. They start looking for new breakout from the cracks of traditional manufacturing.

Expensive land prices forced some shrewd Wenzhou businessmen to take the initiative to go out of Wenzhou. According to statistics, 7 million 800 thousand of Wenzhou's people now have roughly 3 million people investing in other fields.

Zhou Dewen: "like our Wenzhou people in the west, Chongqing, in Sichuan built two shoe capital, then went to a few hundred enterprises, and just around Shanghai, Wenzhou people built 23 large-scale markets, are large scale."

However, not every Wenzhou businessman has the ability to go out of Wenzhou, or some industries are not suitable for development outside Wenzhou because of matching reasons. So for the hundreds of thousands of Wenzhou enterprises staying in Wenzhou, what should they do if they face serious problems such as rising prices of raw materials and rising labor costs?

On the list of export countries for big tiger lighters last year, reporters saw more new faces: Mexico and Columbia, all above 2500 meters above sea level.

Why are new customers developing in areas above 2500 meters above sea level?

It turned out that in the area above 2500 meters, the ordinary windbreak and direct impact lighters were unable to catch fire, and a new type of highlighter developed by Da Hu company last year successfully realized plateau wind protection and fire fighting. This new product has brought new business opportunities to the tiger lighter.

In the second half of last year, only about two million of the highland lighters were exported. The new products brought new market and new hope to the enterprises. Not only did they work hard to develop new products, but also the big tiger lighters invested heavily in the process and design of the original products to improve the added value of the products.

After the technological pformation, the price has more than doubled. Zhou Dahu has tasted the sweetness brought by technological innovation. Zhou Dahu told reporters that there seemed to be no need for continuous innovation in the absence of too many technological lighters. In fact, they had to develop hundreds of new lighters every year.

Wenzhou enterprises need more value added, and for Yu Wen pin, who makes the wire and cable business, the new technology has also gone out of the shadow of the rising price of raw materials. The raw materials of wire and cable are mainly copper, which has surged 3 times more than 20 thousand yuan per ton from the beginning of 2004 to 60 thousand yuan per ton now.

In order to overcome the huge increase in copper price and the cost increase after the rise, Yu Wen Wen developed a copper clad aluminum wire and cable the year before. The bread was made of copper, not only a little bit higher in performance, but also in cost.